1、Innovating in Pursuit of New HeightsAugust Mainland Banking Survey 2023 Summary 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms
2、 of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Foreword1.Economic and financial review and outlook2.2022 review and 2023 outlook for the banking ind
3、ustry3.Tightened regulatory policies to maintain stabilityTable of contents01615535 5Overview02Important topicsVision:Vision:Winning strategies for banks in an era of Winning strategies for banks in an era of differentiated competitiondifferentiated competition71713 3818103Commercial banks financial
4、 summaryContact us999972 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member
5、firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)p
6、artnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2023 KPMG Huazhen LLP,a Peoples Repub
7、lic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private Eng
8、lish company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member fir
9、ms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.ForewordTony CheungTony CheungHead of Financial Services,KPMG ChinaThomas ChanThomas ChanHead of Fi
10、nancial Services Assurance,KPMG ChinaSince the beginning of 2023,we have seen choppy waters around the world,including a global energy crisis,rising inflation,geopolitical tensions,and uncertain economic prospects in China and overseas.Banks around the world are also facing these challenges.In this
11、context,one important factor that bank executives should consider is whether their banks are developing and implementing strategies that will help them navigate turbulence and quickly adapt.Fortunately,in general,we see positive signs in the domestic banking sectors 2023 Q1 operating indicators,whic
12、h show that the sector has maintained a high growth rate in scale and steadily recovered its profitability,while demonstrating sound asset quality and capital adequacy.Under the guidance of the 20th National Congress of the Communist Party of China,the path for social and economic development in Chi
13、na is clearer,and the environment will be more conducive to the steady development of the banking industry.Nonetheless,going forward,macroeconomic uncertainty and instability are expected to persist,and banks will be subject to more stringent regulation,which will present challenges in terms of shor
14、t-term performance,long-term operating capabilities,the need to cope with future market and policy changes,and efforts to unlock new paths for development.In this report,we provide a general summary of the opportunities and challenges facing Chinas banking sector in the new era from a macro perspect
15、ive.In the coming years,we hope that banks will cultivate future-proof business and development models that focus on creating value,improving operational resilience,and responding effectively to risks.By following this path,they will be able to successfully adapt in a changing world and climb to new
16、 heights of prosperity.The world is undergoing profound changes of a scale unseen in a century.The economic and financial sectors are seeing rising global resource allocation costs,tightening liquidity,pressing financial risks and other new challenges.In this context,Chinas banking industry has show
17、n strong resilience,underpinned by the determination and skill of the countrys financial regulators.According to the requirements and expectations for financial regulation in the 14th Five-Year Plan and the Long-Range Objectives Through the Year 2035,enhanced financial risk management has been made
18、the top priority for the banking industry.On 18 May 2023,the National Administration of Financial Regulation(NAFR)was officially set up,marking a new milestone in financial regulation.In 2023,banking regulation is expected to continue to be stringent,and regulatory policies will continue to encourag
19、e commercial banks to expand support for small and micro enterprises,technological innovation,green development and other sectors,with a view to forming a virtuous cycle between financial services and the real economy.While preparing the 2023 Survey Report,we learned that decision-makers in the sect
20、or are pursuing comprehensive risk management,refined management,and integrated management of risks from various dimensions.They are also implementing the new requirements for differentiated regulation,refined measurement,inclusive orientation and digital transformation in order to adhere to Chinas
21、New Capital Regulations and align with Basel III.Against this backdrop,we held in-depth,forward-looking discussions in an effort to provide analysis that will help the industry explore new opportunities in digitalised and intelligent risk management.2023 KPMG Huazhen LLP,a Peoples Republic of China
22、partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company
23、limited by guarantee.All rights reserved.Printed in Chinese Mainland.2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPM
24、G global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Sam ShiSam ShiHead of Banking,KPMG ChinaRaymond LiRaymond LiPartner,Financial Services(Editor-in-Chief)KPMG Chin
25、a In recent years,financial regulators and the former China Banking and Insurance Regulatory Commission(CBIRC)have released a number of new regulatory policies,including guiding opinions on the Fintech Development Plan and digital transformation.Under these policies,commercial banks are gradually de
26、epening their digital transformation,and focusing their attention on the integration of financial services,business operations,digitalisation,technology-driven initiatives and data empowerment.However,these tasks are easier said than done.Going forward,we need to ask ourselves,how can traditional bu
27、siness models and management models be comprehensively upgraded to promote the transformation of industrial finance and green finance?How can digitalisation strategies be implemented to enable multi-dimensional innovation in bank products,services,business models,risk control and other areas,and how
28、 can we measure productivity management capabilities?How can banks focus on data governance,anti-money laundering(AML)management,business and finance integration,organisational change and talent training,customer experience optimisation,and business scenario innovation to achieve bank value growth?H
29、ow should rural banks improve their corporate governance,internal control,and liquidity risk management and control in the rapidly changing market?These questions are all transformational pain points that banks are finding ways to break through during this critical moment of reform.The report to the
30、 20th National Congress of the Communist Party of China mapped out the development blueprint for the country.The banking sector should seize strategic opportunities and the development window to deepen the transformation of technology and finance;upgrade inclusive finance,green finance and wealth fi
31、nance;promote in-depth digital development;and facilitate the comprehensive and high-quality growth of the financial service ecosystem.This report is the 17th annual survey that KPMG has published for Chinas banking industry.This edition provides analysis of Chinas economic and financial conditions,
32、a review of banking development and its outlook going forward,interpretation of regulatory policies,analysis of important topics,and banks performance data.Amid rising uncertainties in the industry,we have invited experts from KPMG Chinas various banking service lines to analyse important issues in
33、depth and provide insights into development trends.Our discussions focus on topics such as digital transformation,sustainability,risk management,data-driven initiatives,and management compliance.From industry best practices and tech development trends,to business scenario innovation,we have shared o
34、ur exclusive insights into the industrys current situation,and provided ideas for innovative solutions.I would like to thank my colleagues who actively participated in our discussions and contributed to the reports publication.We have also illustrated and analysed the individual operating indicators
35、 of 150 listed and non-listed commercial banks in 2022,and analysed their scale of business,profitability,asset quality,capital adequacy and other key indicators in depth to provide a valuable reference for decision-making.Going forward,as professional service providers,we hope to initiate brainstor
36、ming sessions in the industry,integrating resources and views from various sources and across different dimensions.We look forward to holding discussions with industry peers on how breakthroughs can be made in banking business development,with a view to helping the industry make progress and achieve
37、 long-term stability and prosperity.2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independ
38、ent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Overview01 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainl
39、and,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.2023 KPMG Huazh
40、en LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International
41、 Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary6 6China needs more economic growth China needs more economic growth momentum in the momentum in the early stage of the early stage of the recoveryrecov
42、eryIn 2022,Chinas economy grew at a slower pace under the weight of multiple pressures posed by the macroeconomic downturn during the year,and the impact of some of these challenges is still being felt.First,the continued spread of COVID-19 is still having an impact on Chinas economy and society.Sec
43、ond,the real estate market is still soft.In 2022,real estate investment declined for the first time annually,falling 10%year-on-year(YOY)and cutting annual GDP growth by 1.7 percentage points.Third,the Federal Reserve(Fed)s rate hikes have triggered substantial fluctuations in the global economy and
44、 financial markets.To stabilise economic growth,China has taken measures to relax its monetary policy,including cutting interest rates and the required reserve ratio(RRR).In 2022,the widening gap in monetary policy between China and the US increased volatility in Chinas financial market and impacted
45、 the exchange rate and cross-border capital flows.Fourth,geopolitical uncertainty has been intensifying.The Russia-Ukraine conflict has exacerbated global inflation,and trade tensions between China and the US have become the new normal.These challenges combined during the year to deliver a substanti
46、al drag on Chinas GDP,which recorded moderate growth of 3.0%in 2022.China started 2023 with steady economic momentum in the wake of the relaxation of epidemic prevention and control measures.The strong recovery of the service industry,better-than-expected growth in exports and the rebounding real es
47、tate industry jumpstarted the economy in 2023 Q1.China notched YOY growth of 4.5%in 2023 Q1,1.6 percentage points higher than in 2022 Q4.However,we should bear in mind that Chinas economy is still at the early stage of recovery.Consumers still need to regain their confidence in private enterprises;a
48、nd as we observed unbalanced growth across various industries,the foundation of the economic recovery needs to be strengthened.For example,services grew faster than industries,while large corporates performed better than small-and medium-sized enterprises(SMEs).Going forward,the complex internationa
49、l landscape coupled with the downturn in the global economy will likely slacken Chinas export growth.Macroeconomic policies are expected to remain robust in the near future in an effort to fully tap domestic demand and stabilise economic growth.As employment improves,more supporting policies are int
50、roduced and consumption scenarios increase,we expect consumer spending to grow,investment growth to stabilise,and industrial transformation upgrading to continue.These trends should help drive economic momentum,and the lower base in 2022 should also help buoy YOY growth figures for the year.Overall,
51、we expect Chinas economy to expand by 5.7%in 2023.Economic and financial review and outlook1Kevin KangChief EconomistKPMG ChinaRaymond LiPartner,Financial Services(Editor-in-Chief)KPMG China 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability
52、 company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese
53、 Mainland.OverviewOverview7 7Under the lingering impact of epidemic prevention and control measures in 2022,industrial production has remained weak due to shortened time spent on production,greater pressure on supply chains and lukewarm market demand.Since January 2023,stabilising policies have help
54、ed revitalise market demand and strengthen industry and supply chains.Industrial production has been steadily returning to normal,with industrial output at Chinas major industrial companies growing 3.0%YOY in 2023 Q1,up 0.2 percentage points from 2022 Q4(Figure 2).However,the recovery in industrial
55、production has been weaker than that seen in services,as output growth of the latter recorded more significant YOY growth of 5.4%in 2023 Q1,up 3.1 percentage points from 2022 Q4.Relatively high inventory levels,the shrinking profitability of industrial enterprises and the global economic slowdown ha
56、ve all contributed to stagnant foreign demand and the dampening of industrial production.Chinas Manufacturing Purchasing Managers Index(PMI)and capacity utilisation rate both recently fell.These latest figures confirm that Chinas economy is still at the early stage of recoveryand that more momentum
57、is needed to boost industrial production.Figure 1 Figure 1 Quarterly GDP growth(%)Quarterly GDP growth(%)Source:Wind and KPMG analysis-10-505101520252010201220142016201820202022Constant pricesCurrent pricesFigure 2 Figure 2 Industrial output and manufacturing PMIIndustrial output and manufacturing P
58、MISource:Wind and KPMG analysis0102030405060708090100-50-40-30-20-10010203040502010201220142016201820202022Monthly industrial outputManufacturing PMI,right axis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,K
59、PMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Ban
60、king Survey 2023 Summary8 8Analysis from the three demand perspectives of consumption,investment and foreign trade:As a major driver of economic development in China,consumer spending contributes the most to economic growth.Due to the epidemic and related control policies,total retail sales of consu
61、mer goods decreased 0.2%YOY in 2022,which was notably lower than average growth prior to COVID-19.In terms of consumer goods,in 2022,sales of household goods and daily necessities boomed in light of the decline in spending on contact-based offline services due to the impact of the epidemic.Since the
62、 beginning of 2023,the overall consumption recovery has been solid,as final consumer spending in 2023 Q1 drove economic growth by 3%,representing 66.6%of total economic growth.With the lifting of consumption restrictions and the implementation of policies to encourage consumer spending,retail sales
63、of jewellery,apparel,tobacco and alcohol,cosmetics,sports and recreational goods,and other consumer goods that involve offline social activities grew faster than in the previous year(Figure 3).As catering,tourism and other services gained momentum during the recovery,they became a more significant d
64、river of economic growth.Despite these upward trends,consumption still has a long way to go before it returns to normal.Automotive and housing consumption in particular are in need of a boost.According to the Urban Depositor Survey conducted by the Peoples Bank of China(PBOC)in Q1,18.8%of people wer
65、e inclined to invest more in 2023 Q1,up from 15.5%in 2022 Q4.Meanwhile,the percentage of people inclined to consume more increased only moderately,indicating the various degrees of recovery in residents willingness to invest and consume.As employment gradually picks up,more policies to encourage con
66、sumption become effective and consumption scenarios increase,residents purchasing power and willingness to consume are expected to grow,and we expect more residents to channel their savings to the consumer and investment sectors as the financial market improves.Figure 3Figure 3Source:Wind and KPMG a
67、nalysis-10-505101520MedicineJewelryGasoline and other energy goodsApparelFoodTobacco and alcoholCosmeticsSports and recreational goodsGroceriesFurnitureBeveragesOffice suppliesHousehold appliancesAutomotiveConstruction materialsCommunication equipment2023 Q1Throughout 2022YOY YOY growth in retail sa
68、les of consumer goods of companies growth in retail sales of consumer goods of companies above the designated size(%)above the designated size(%)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)
69、partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview9 9Among the three p
70、illars of investmentmanufacturing,infrastructure and real estatemanufacturing and infrastructure investments sustained a steady recovery in 2023 Q1.Meanwhile,as the policy of“ensuring building delivery and stabilising peoples livelihood”takes effect,the downward trend in real estate investment appea
71、rs to have levelled off(Figure 4).In 2023,manufacturing investment has maintained a steady recovery.First,the general recovery of economic activities,the prosperity seen in emerging industries,and other factors have supported the expansion of manufacturing investment.Second,strong export activity in
72、 2023 Q1 also boosted manufacturing investment.In particular,robust exports of new energy vehicles and other electromechanical and high-tech products have encouraged enterprises to expand their capital expenditure.Third,supportive policies continued to guide the manufacturing industry in its pursuit
73、 of high-quality development,while also boosting investment confidence.Macroeconomic policies have also been stepped up to ensure that infrastructure investment continues to expand and stabilise economic growth.Due to tighter cash flows and negative market sentiment,real estate investment has still
74、not pulled out of the downturn that began in 2022,during which time investment in real estate development on a national basis notched a YOY decline of 10%,the first decline investment in real estate development in its history.Since the second half of 2022,the government has introduced an array of po
75、licies to stabilise the market from both the demand side and supply side.Recently,policies to“ensure building delivery and stabilise peoples livelihood”have been made more vigorous,and in 2023 Q1,building area completed increased by 14.7%YOY.However,during the same period,new construction starts by
76、surface area tumbled 19.2%compared to 2022 Q1 figures.In 2023 Q1,total real estate development investment amounted to RMB 2.5 trillion,representing a YOY decline of 5.8%,and confirming that the real estate market is still adjusting and recovering.On the other hand,real estate sales figures presented
77、 a sunnier picture,largely because rigid demand that was delayed and accumulated last year due to the impact of the epidemic,as well as demand for improved housing,was tapped in 2023 Q1.Combined with the continuous easing of real estate control policies,total commercial housing area sold on a nation
78、al basis reached 300 million square metres in 2023 Q1,representing a YOY growth reduced by 1.8%,which was a significantly slower decline compared to the figure recorded at the end of 2022.As a leading indicator of the real estate market,strong sales will have a positive impact on new construction st
79、arts by surface area and investment for some time to come,and for this reason we expect to see a modest recovery in the real estate market for the rest of the year.Figure 4 Figure 4 Monthly moving weighted average fixed asset investment by sector(%)Monthly moving weighted average fixed asset investm
80、ent by sector(%)Source:Wind and KPMG analysis-25-20-15-10-5051015202530201520162017201820192020202120222023ManufacturingInfrastructureReal estate 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR
81、)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 202
82、3 Summary1010Amid the implementation of different policies for epidemic prevention and relief within and outside China over the last three years,China has seized the opportunity brought by increased foreign demand by leveraging its complete supply chain and manufacturing advantages,and as a result,t
83、he country has seen substantial growth in exports,which have become the main engine driving Chinas economic growth.From 2022 Q1 to Q3,the cumulative YOY contribution of net exports to GDP exceeded 30%,the highest figure recorded in the past two decades.Foreign demand,however,was sluggish in 2022 Q4,
84、as the global economy took a turn for the worse.In 2023 Q1,China registered rapid growth of 8.5%in exports,which was significantly higher than the 0.9%figure recorded for the first two months.The quarterly figure jumped mainly because YOY monthly growth reached 23.4%in March,much higher than expecta
85、tions(Figure 5).Chinas export figures show that the countrys export structure is upgrading,as commodities for export are shifting towards those produced by high-end manufacturing and equipment manufacturing.In particular,high-tech flagship exports include electric vehicles,lithium-ion batteries and
86、solar batteries,with total exports of these three products surging by 66.9%in 2023 Q1,representing a YOY increase of RMB 100 billion and driving overall export growth by 2%.In short,new commodities are playing an increasingly important role in promoting Chinas exports.Despite stagnant demand in deve
87、loped economies,Chinas exports to countries participating in the Belt and Road initiative,members of the Regional Comprehensive Economic Partnership(RCEP),and other emerging markets are still soaring.Chinas exports to ASEAN members rose by 28%YOY in 2023 Q1,with March exports in particular hitting a
88、 monthly record high of RMB 385.2 billion.Going forward,we expect to see strong export growth in 2023 Q2 due to the relatively lower base in 2022 Q2.However,Chinas exports will still face a certain degree of pressure in the second half of 2023 as rising inflation in developed economies and heightene
89、d banking risk in Europe and the US dampen prospects for global economic growth.Figure 5 Figure 5 Monthly import and export activity(%)Monthly import and export activity(%)Source:Wind and KPMG analysis-60-40-200204060801001202014201520162017201820192020202120222023ExportImport 2023 KPMG Huazhen LLP,
90、a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limite
91、d,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview1111According to financial data,the total monetary supply and credit supply increased within a reasonable range in 2022,as the balance of the broad measure of money supply(M2)reached RMB
92、266.4 trillion,representing YOY growth of 11.8%.Aggregate financing reached RMB 32 trillion in 2022,which reflected a modest increase of RMB 668.9 billion from 2021.The increase in aggregate financing moderated in 2022 to a YOY growth rate of 9.6%under the combined impact of multiple factors,includi
93、ng epidemic control measures,the lukewarm capital market,and a lower risk appetite among investors.In 2023 Q1,aggregate financing amounted to RMB 14.5 trillion,representing an increase of RMB 2.5 trillion or 10%compared to 2022 Q1.Aggregate financing regained its momentum in 2023 Q1 as the economy r
94、eturned to normal in the wake of the epidemic,enterprises accelerated resumption of work and production,and market demand for financing increased in February and March(Figure 6).In terms of monetary supply,M2 increased by 12.7%YOY in Q1,which can be attributed to three factors.First,revived credit e
95、xpansion in 2023 Q1 magnified the deposit multiplier effect.Second,funds from treasury products such as wealth management were returned to banks as risk appetites in the real economy dampened.And third,funds were released from the RRR cut,in combination with the introduction of fiscal policy support
96、.Each of these factors helped drive an increase in the broad measure of the money supply.Figure 6 Figure 6 Aggregate financing balance and M2 growth(%)Aggregate financing balance and M2 growth(%)Source:Wind and KPMG analysis68101214161820162017201820192020202120222023Aggregate financing balance YOY
97、growthM2 YOY growth 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms
98、 affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary1212RMB loans are a major contributor to aggregate financing.Total new RMB loans at the end of 2023 Q1 amounted to RM
99、B 10.7 trillion,representing YOY growth of RMB 230 milion and accounting for 74%of new aggregate financing.According to the PBOC quarterly survey in 2023 Q1,the bank loan demand index rose from 59.5%in 2022 Q4 to 78.4%in 2023 Q1,representing YOY growth of 6.1%and marking a record high YOY growth rat
100、e over the last decade.Structurally,loans granted in 2023 Q1 were still focused on corporates at the expense of individuals.In Q1,medium-and long-term corporate loans shot up,recording a substantial YOY increase of RMB 2.7 trillion(Figure 7),as banks were encouraged by policy guidance to increase cr
101、edit support for infrastructure,manufacturing and real estate development,with an extra boost from the sustained economic recovery.At the end of March,the balance of medium-and long-term manufacturing loans had grown by 41.2%YOY,while medium-and long-term infrastructure loans had increased by 15.2%Y
102、OY,both outperforming loan growth in all other sectors.Short-term corporate loans have also been growing,with new loans as at the end of March amounting to RMB 1 trillion,as they acted as a substitute for bill financing.In terms of personal lending,medium-and long-term personal loans remained sluggi
103、sh amid the depressed real estate market.With the lifting of epidemic prevention measures at the end of 2022,the recovery of service and consumer spending stimulated growth in personal consumption and short-term loans.The financial system has also been bolstering key areas of the real economy by off
104、ering effective support to small and micro enterprises and owner-operator businesses.In Q1,the scale of personal business loans swelled as a result of lower interest rates.On the whole,short-term personal loans in 2023 Q1 amounted to about RMB 770 billion,reflecting growth of RMB 570 billion compare
105、d to 2022 Q1.Figure 7 Figure 7 Structure of Structure of RMB loans(RMB trillions)RMB loans(RMB trillions)Source:Wind and KPMG analysis-2.0-1.00.01.02.03.04.05.06.07.08.0Short-termindividualMedium-andlong-termindividualBill financingShort-termcorporateMedium-andlong-termcorporate2022 Q12023 Q1 2023 K
106、PMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG Inte
107、rnational Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview1313Overall,new RMB deposits stood at RMB 15.4 trillion at the end of 2023 Q1,representing YOY growth of RMB 4.5 trillion.Specifically,new residents deposits increased by
108、RMB 9.9 trillion,reflecting a YOY increase of RMB 2 trillion(Figure 8).Usually,enterprises pay salaries,rewards and bonuses on the eve of the Spring Festival,providing an important source of new deposits in January.On the other hand,amid the disappointing performance of both the stock and real estat
109、e markets,residents have generally been saving more and approaching investments more conservatively.Notably,residents new deposits increased by about RMB 205.1 billion YOY in March,in contrast to the sharp increase of RMB 1.8 trillion in the previous two months.Going forward,we expect a certain amou
110、nt of savings to be channelled to the consumption and investment sectors as precautionary savings are spent in light of improving economic fundamentals.In addition,deposits of non-financial enterprises increased by RMB 3.18 trillion in 2023 Q1,indicating that corporate loan demand has continuously g
111、rown.Figure 8Figure 8Source:Wind and KPMG analysis-4-20246810121416201520162017201820192020202120222023ResidentsCorporateFiscalNon-bank financial institutionsEffective macroeconomic policies continue to Effective macroeconomic policies continue to stabilise growthstabilise growthTo promote the overa
112、ll recovery,macroeconomic policies have been introduced to ensure the stable growth of the economy.According to the meeting of the Political Bureau of the Communist Party of China Central Committee on 28 April 2023,pressures from demand contraction,supply shocks and weakening expectations were being
113、 alleviated and the economy was recovering,although endogenous momentum and demand might not be as strong as expected.The key to the sustainability of the economic recovery lies in the restoration and expansion of demand;consistent,stable and targeted macroeconomic policy is also important.Fiscal po
114、licy should be proactive and strengthen performance,while monetary policy should be prudent,precise and robust.Coordinated and aligned policies will act together to promote demands.Proactive fiscal policy aims for“greater intensity”and“enhanced performance.”Focusing on quantity,“greater intensity”en
115、sures a certain scale of fiscal expenditure,an appropriately expansionary fiscal policy,and steady growth through special bonds,fiscal interest subsidies and other tools.Focusing on quality,“enhanced performance”refers to improving the efficiency of expenditures and achieving better policy results w
116、hile increasing fiscal support.In 2023,local governments in China plan to issue RMB 3.8 trillion in special bonds,up RMB 150 billion from 2022,to maintain the scale of government investment and appropriately expand the scope of sectors in which special bond funds can be invested and used as project
117、capital.Quarterly new RMB loans granted by financial institutions by sector Quarterly new RMB loans granted by financial institutions by sector(RMB trillions)(RMB trillions)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chines
118、e Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese
119、Mainland Banking Survey 2023 Summary1414Figure 9 Figure 9 National general public budget expenditureNational general public budget expenditureSource:Ministry of Finance and KPMG analysis6.8%7.9%5.4%0.9%6.8%3.0%0510152025300%2%4%6%8%10%201820192020202120222023EGrowth(%)Size(RMB trillion,right axis)To
120、tal government expenditure is budgeted to be RMB 27.5 trillion in 2023,representing YOY growth of 3%(Figure 9).At the end of March,government expenditure stood at RMB 6.8 trillion,reflecting YOY growth of 6.8%and accounting for 24.7%of the 2023 budget.The growth in government expenditure in Q1 was 0
121、.9%faster than that in 2022 Q1.The protection of peoples livelihood was still the main focus of government expenditure,accounting for 42%of the total.We should point out that local governments have been facing increasing pressure in making debt interest payments.Debt interest payments amounted to RM
122、B 230.9 billion in 2023 Q1,representing YOY growth of 15.9%.In this context,local governments need to further optimise the structure of their debt maturities,reduce their interest payment burden,curb new debts and repay existing ones.In the context of monetary policy,in 2023 Q1,China adhered to a po
123、licy of prioritising economic stability while pursuing progress.Going forward,the country will continue to provide robust support for key areas from both a volume and structural perspective.In terms of volume,on 17 March,the PBOC announced that it was cutting the RRR by 25 basis points for all banks
124、,to replenish banks medium-and long-term liquidity and reinforce the foundation of the economic recovery.Structurally,the PBOC continued to use structural monetary policy tools to encourage financial institutions to strengthen financial services for inclusive finance,technological SMEs and technolog
125、ical innovation sectors and to boost the countrys economic growth potential.At the end of March 2023,the PBOC was using 17 structural monetary policy tools,which carried a balance of RMB 6.8 trillion,up RMB 400 billion from the balance at the end of 2022.Since the beginning of 2023,The banking secto
126、rs in the US and Europe have come under increased pressure due to rising interest rates and interest rate risk is now peoples top concern.China has implemented a highly autonomous monetary policy over the last few years,which has resulted in relatively stable interest rates and controllable overall
127、risk.Going forward,the PBOC will continue enacting a robust monetary policy to ensure that monetary and credit growth are steady and interest rates are appropriate,and the central bank still has the option to cut the RRR and interest rates in the future if needed.Meanwhile,the PBOC will continue to
128、fully leverage the guiding role of structural monetary policy tools and channel more financial resources to key areas such as private small and micro enterprises,technological innovation and green development.Last year,policy-based financial instruments effectively supported the expansion of infrast
129、ructure investment and helped stabilise the economy,and had the effect of driving employment and promoting consumer spending.This year,the PBOC will continue to increase the use of policy-based financial instruments to support fiscal expenditure and stimulate effective investment.2023 KPMG Huazhen L
130、LP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Lim
131、ited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview1515Raymond LiPartner,Financial Services(Editor-in-Chief)KPMG ChinaKevin KangChief EconomistKPMG China2TotalTotal assetsassets growgrow atat a a fasterfaster pacepaceAt the end of 2022
132、,total assets of commercial banks stood at RMB 319.8 trillion,up 10.8%YOY,which was 2.2 percentage points faster than the growth rate at the end of 2021.After sluggish asset growth in 2020 and 2021,commercial banks total assets are now growing at a brisker pace(Figure 1).AssetAsset perspectiveperspe
133、ctive2022 review of the banking industry2022 review of the banking industrySince 2022,the PBOC and CBIRC have implemented an array of State Council policies and follow-up measures in order to stabilise the economy;and banking and insurance institutions have been encouraged to continuously improve th
134、e quality and efficiency of services provided to the real economy,and specifically to boost support for key areas such as small and micro enterprises.While steadily strengthening financial services,Chinas banking industry has achieved steady growth in total assets,and kept key operating and risk ind
135、icators within a reasonable range.2022 review and 2023 outlook for the banking industry 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are memb
136、er firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary1616Figure Figure 1 1 Commercial banks total asse
137、ts(RMB trillions)Commercial banks total assets(RMB trillions)Source:Wind and KPMG analysis155.8181.7196.8210.0239.5265.8288.6319.815.6%16.6%8.3%6.7%14.1%11.0%8.6%10.8%0%2%4%6%8%10%12%14%16%18%050100150200250300350Total assetsYOY growth rate,right axisThe rapid expansion of commercial banks total ass
138、ets was mainly driven by an upswing in bank loans.The PBOCs statistics show that,at the end of 2022,total accumulated new RMB loans of financial institutions stood at RMB 21.3 trillion,representing an increase of RMB 1.4 trillion or 7%YOY.Specifically,new RMB loans issued by large Chinese-funded ban
139、ks1reached RMB 11.9 trillion in 2022,representing a YOY increase of 27%;while new RMB loans granted by small-and medium-sized Chinese-funded banks2amounted to RMB 9.9 trillion in 2022,representing a YOY decrease of 6%(Figure 2).Figure Figure 2 2 Quarterly new RMB loans of large and smallQuarterly ne
140、w RMB loans of large and small-and mediumand medium-sized sized banks(RMB trillions)banks(RMB trillions)0510152025New RMB loans of large banksNew RMB loans of small-and medium-sized banksSource:Wind and KPMG analysis1Banks with total assets in domestic and foreign currencies of over RMB 2 trillion(t
141、otal assets in domestic and foreign currencies of financial institutions as at the end of 2008),which includes Industrial and Commercial Bank of China(ICBC),China Construction Bank(CCB),Agricultural Bank of China(ABC),Bank of China(BOC),China Development Bank(CDB),Bank of Communications(BoCom)and Po
142、stal Savings Bank of China(PSBC).Source of definition:Peoples Bank of China2 Cross-provincial banks with total assets in domestic and foreign currencies of under RMB 2 trillion(total assets in domestic and foreign currencies of financial institutions as at the end of 2008).Source of definition:Peopl
143、es Bank of China 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms af
144、filiated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview1717Loans in 2022 were channeled to corporates at the expense Loans in 2022 were channeled to corporates at the expense of individualsof individuals
145、From a sectoral perspective,in 2022,loans were focused on corporates at the expense of individuals(Figure 3).In 2022,total medium-and long-term corporate loans stood at RMB 11.1 trillion,which was RMB 2 trillion or 20%higher than in 2021.Meanwhile,total short-term corporate loans amounted to RMB 3 t
146、rillion,representing a whopping increase of RMB 2.1 trillion or 220%from 2021.Due to strengthened monetary policy guidance in 2022 and the continuous optimisation of the credit structure,key areas such as manufacturing,infrastructure,real estate,and small and micro enterprises gained more support.In
147、 the context of individuals,in 2022,total medium-and long-term personal loans stood at RMB 2.8 trillion,plunging RMB 3.3 trillion or 55%from 2021.Most medium-and long-term personal loans are real estate loans,which remained sluggish in 2022 amid the depressed real estate market and epidemic preventi
148、on and control measures.Meanwhile,total short-term personal loans in 2022 amounted to RMB 1.1 trillion,tumbling RMB 700 billion or 41%from 2021.Short-term personal loans are mainly related to consumption,and for that reason they were more vulnerable to the impact of the epidemic in 2022.During the y
149、ear,consumers were less willing to spend,and the demand for consumer credit fell as income and income expectations went down.In 2023,as more policies encouraging domestic consumption and demand are introduced,combined with the restoration of peoples confidence and the increase in income brought by t
150、he economic recovery,personal loans are expected to resume their upward trend.FigureFigure 3 3 Composition of new RMB loans(RMB trillions)Composition of new RMB loans(RMB trillions)Source:Wind and KPMG analysis1.86.10.99.2-0.11.12.83.011.10.1-10123456789101112Short-termindividualMedium-and long-term
151、 individualShort-termcorporateMedium-and long-term corporateNon-bank financialinstitutions20212022Manufacturing loans,inclusive loans granted to small and Manufacturing loans,inclusive loans granted to small and micro enterprises,and green loans maintained strong YOY micro enterprises,and green loan
152、s maintained strong YOY growth,and growth in real estate loans is expected to growth,and growth in real estate loans is expected to recederecedeStructurally,financial institutions are stepping up support for the real economy and optimising the credit structure,resulting in strong YOY growth in manuf
153、acturing loans,inclusive loans granted to small and micro enterprises,and green loans.At the end of 2022,the balance of medium-and long-term manufacturing loans grew 36.7%YOY,which was 26 percentage points higher than the growth rate for all other loans.2023 KPMG Huazhen LLP,a Peoples Republic of Ch
154、ina partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English comp
155、any limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary1818Interest rates on inclusive loans granted by financial institutions to small and micro enterprises have been falling,and the balance of these loans at the end of 2022 exceeded RMB
156、 23 trillion,representing YOY growth of 23.8%,which was 12.7 percentage points higher than the growth rate for all other loans.In 2022,new inclusive loans amounted to RMB 4.6 trillion,up RMB 440 billion YOY.Among the total balance,inclusive loans granted by large commercial banks made up the lions s
157、hare at RMB 8.6 trillion,accounting for 37.42%of such loans issued by the banking industry.In terms of the other three types of financial institutions,rural financial institutions accounted for 30.6%of inclusive loans granted to small and micro enterprises,joint-stock commercial banks accounted for
158、17.6%,and city commercial banks accounted for 14.4%(Figure 4).Figure Figure 4 4 Quarterly balance of inclusive RMB loans granted by financial Quarterly balance of inclusive RMB loans granted by financial institutions to small and micro enterprisesinstitutions to small and micro enterprisesSource:Win
159、d and KPMG analysis12.413.614.615.116.717.718.619.220.822.023.223.805101520253035400510152025Inclusive loan balance(RMB trillions)In February 2022,a plan to advance the standardisation of the financial sector during the 14th Five-Year Plan period(2021-2025)was promulgated in an effort to accelerate
160、improvements to the green finance system and better use financial instruments to advance the high-quality development of green finance.At the end of 2022,the balance of green loans stood at RMB 22 trillion,representing YOY growth of 38.5%,which was 28.1 percentage points higher than the growth rate
161、for all other loans.In 2022,new green loans amounted to RMB 6 trillion(Figure 5).The PBOCs statistics show that,during 2022,loans granted to projects that will directly and indirectly reduce emissions amounted to RMB 8.6 trillion and RMB 6.1 trillion respectively,together accounting for 66.7%of tota
162、l green loans.FigureFigure 5 5 Quarterly balance and proportion of green loansQuarterly balance and proportion of green loansSource:Wind and KPMG analysis6.5%6.7%6.8%6.9%7.2%7.5%7.8%8.3%9.0%9.5%9.9%10.3%0%2%4%6%8%10%12%0510152025Green loan balance(RMB trillions)YOY growth of green loan balance,right
163、 axis(%)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated
164、with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview1919At the end of 2022,the balances of loans granted for green upgrades to infrastructure,the clean energy sector,and the energy conservation and environment
165、al protection sector stood at RMB 9.8 trillion,RMB 5.7 trillion and RMB 3.1 trillion,representing YOY growth rates of 32.8%,34.9%and 59.1%respectively(Figure 6).FigureFigure 6 6 Composition of Chinas green loan balance in 2022(RMB trillions)Composition of Chinas green loan balance in 2022(RMB trilli
166、ons)Source:Wind and KPMG analysis051015202021-122022-032022-062022-092022-12Green upgrades to infrastructureAt the end of 2022,the balance of real estate loans amounted to RMB 53.2 trillion,representing YOY growth of 1.5%,which was 6.4 percentage points lower than the growth rate at the end of 2021(
167、Figure 7).In the face of various unexpected factors in 2022,including falling market sales,debt defaults of private real estate companies,and increasing numbers of lots going unsold at land auctions,the real estate market was sluggish,and real estate companies saw declining sales across the industry
168、.Against this backdrop,relaxation and optimisation policies were introduced throughout the year,and the central and local governments reiterated their support for“meeting rigid demand for housing and the demand for improved housing.”At the end of 2022,the“16-point Plan”was issued to support the“thre
169、e arrows”of real estate financing,although property buyers are still cautious at present as their confidence has not yet been restored in this uncertain market.FigureFigure 7 7 Quarterly balance and YOY growth rate of real estate loansQuarterly balance and YOY growth rate of real estate loansSource:
170、Wind and KPMG analysis13.913.112.811.710.99.57.67.96.04.23.21.5024681012141642444648505254Real estate loan balance(RMB trillions)YOY growth rate,right axis(%)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG
171、,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Bankin
172、g Survey 2023 Summary2020Specifically,real estate loans represent either real estate development loans or personal home loans.Real estate loans overall saw only a slight uptick in 2022,mainly due to the slower growth of personal home loans.The balance of real estate development loans at the end of 2
173、022 stood at RMB 12.7 trillion,representing YOY growth of 3.7%.This growth rate was 1.5 percentage points higher than the growth at the end of 2022 Q3,and 2.8 percentage points higher than the growth rate at the end of 2021.Meanwhile,at the 2022 year-end,the balance of personal home loans stood at R
174、MB 38.8 trillion,representing YOY growth of 1.2%,which was 10 percentage points lower than the growth rate at the end of 2021(Figure 8).As at the end of 2022,the PBOC had set aside RMB 200 billion in structured credit tools to ensure building delivery;and in January 2023,it was announced that the lo
175、wer limit of interest rates on the first personal loan to purchase commercial housing will be abolished in phases.These measures should help restore peoples willingness to purchase properties.Ultimately,the recovery of the real estate market relies on sustained improvements in peoples confidence and
176、 incomes.Therefore,in 2023,policymaking for this industry will focus on boosting property buyers confidence,and stabilising property prices and expectations.Figure 8Figure 8 Quarterly balance of real estate development and individual Quarterly balance of real estate development and individual housin
177、g loanshousing loansSource:Wind and KPMG analysis-2%0%2%4%6%8%10%12%14%16%18%0102030405060Personal home loan balance(RMB trillions)Real estate development loan balance(RMB trillions)YOY growth rate of real estate development loan balance,right axisYOY growth rate of personal home loan balance,right
178、axis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated wit
179、h KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview2121The overall nonThe overall non-performing loan(NPL)ratio of banks performing loan(NPL)ratio of banks declines,and risk mitigation capabilities remain reason
180、able declines,and risk mitigation capabilities remain reasonable At the end of 2022,the total balance of commercial banks NPLs stood at RMB 2.98 trillion,representing a slower quarter-on-quarter(QOQ)growth of 4.8%,and continuing a mildly upward trend.Rises in the industrys total NPL balance have bee
181、n subdued in recent years,with non-performing assets climbing at a slower rate than asset growth,indicating a marked improvement in asset quality.The overall NPL ratio of commercial banks at the end of December 2022 stood at 1.63%,representing a YOY decline of 10 basis points and marking nine consec
182、utive quarters of declines(Figure 9).Figure Figure 9 9 Quarterly balance and ratio of nonQuarterly balance and ratio of non-performing loans of commercial performing loans of commercial banksbanks1.01.21.41.61.82.02.201234NPL balance(RMB trillions)NPL ratio,right axis(%)Among the different types of
183、banks,large commercial banks3and joint-stock commercial banks have maintained relatively low NPL ratios.Conversely,the NPL ratios of city commercial banks and rural commercial banks have stayed relatively high.In 2022,large commercial banks and joint-stock commercial banks maintained NPL ratios of 1
184、.31%and 1.32%respectively,representing YOY declines of 0.06 percentage points and 0.05 percentage points.The NPL ratio of city commercial banks fell by 0.05 percentage points YOY to 1.85%;while that of rural commercial banks dipped 0.41 percentage points YOY to 3.22%(Figure 10).Rural commercial bank
185、s effectively curbed their NPL ratio by stepping up loan write-offs in 2022,although they still need to continue working to lower their relatively high NPL ratio of more than 3%in the wake of a historical rise in NPLs.In recent years,the banking industry has been urged by the CBIRC to step up effort
186、s to dispose of NPLs.As a result,over RMB 3 trillion in NPLs have been disposed of annually for consecutive years,reflecting the write off of a significant portion of the industrys total NPL balance.Meanwhile,banks have been stepping up support for the real economy,and the overall NPL ratio has been
187、 declining as newly granted loans increase faster than the growth of new NPLs.3According to the List of Banking Financial Institutions released by the CBIRC,the six large commercial banks are ICBC,CCB,ABC,BOC,BoCom and PSBC.PSBC has been included among the six large commercial banks since 2019Source
188、:Wind and KPMG analysis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member f
189、irms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary2222Figure Figure 1010 Quarterly nonQuarterly non-performing loan ratios of different commercial performing loan
190、ratios of different commercial banks(%)banks(%)0.00.51.01.52.02.53.03.54.04.55.0201720182019202020212022Large commercial banks股份制商业银行城市商业银行民营银行农村商业银行外资银行Joint-stock commercial banksPrivate commercial banksForeign-funded banksLarge commercial banksCity commercial banksRural commercial banksThe overal
191、l provision coverage ratio at the end of 2022 stood at 205.8%,up 8.9%from the end of 2021.This ratio has risen for nine consecutive quarters,signifying that commercial banks have strengthened their risk mitigation capabilities to a reasonable level(Figure 11).Since the end of 2021,the provision cove
192、rage ratios of the various types of banks have increased to different extents.At the end of 2022,the provision coverage ratio of large commercial banks reached 245%,representing an increase of 6 percentage points from the end of 2021,while the ratio of joint-stock commercial banks stood at 214%,up 8
193、 percentage points YOY.City and rural commercial banks posted provision coverage ratios of 192%and 143%respectively at the end of 2022,representing YOY growth of 3 and 14 percentage points respectively.In view of the orderly economic recovery that has taken place since the beginning of 2023,some lea
194、ding commercial banks might reduce their provisioning rate as part of their strategies to return to normal.By reducing their provisioning rates,banks can offer more support for the real economy and also maintain adequate growth in net profitability.However,for certain rural commercial banks with wea
195、ker risk mitigation capabilities,their ability to withstand risks is still a concern.Figure Figure 1111 Quarterly loan provision ratios and provision coverage ratios of Quarterly loan provision ratios and provision coverage ratios of commercial bankscommercial banksSource:Wind and KPMG analysis2.83.
196、03.23.43.617018019020021022020152016201720182019202020212022Provision coverage ratio(%)Loan provision ratio,right axis(%)Source:Wind and KPMG analysis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Maca
197、u(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview2323Liquidity
198、steadily improvesLiquidity steadily improvesAt the end of December 2022,the overall liquidity ratio of commercial banks stood at 62.9%,2.6 percentage points higher QOQ,demonstrating a general trend of steady improvement.The liquidity ratios of large commercial banks,joint-stock commercial banks,city
199、 commercial banks,and rural commercial banks rose by 1.7%,3.1%,3.3%and 5.1%YOY respectively,indicating varying marginal improvements(Figure 12).Figure Figure 1212 Quarterly liquidity ratios of commercial banks(%)Quarterly liquidity ratios of commercial banks(%)Source:Wind and KPMG analysis4550556065
200、707580201720182019202020212022Commercial banks(overall)Large commercial banksJoint-stock commercial banksCity commercial banksRural commercial banksA liquidity coverage ratio refers to the ratio of high-quality liquid asset reserves to net fund outflows in the next 30 days.The overall liquidity cove
201、rage ratio in the industry was 147.4%at the end of 2022,up 2 percentage points YOY,and higher than the regulatory indicator of 100%specified in the Administrative Measures on Liquidity Risk of Commercial Banks(Figure 13).FigureFigure 1313 Quarterly liquidity coverage ratios of commercial banks(%)Qua
202、rterly liquidity coverage ratios of commercial banks(%)Source:Wind and KPMG analysis141.1140.2137.3146.6151.5142.5138.7146.5141.8141.2142.2145.3143.2146.3142.7147.4120130140150160170 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company
203、 in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainlan
204、d.Chinese Mainland Banking Survey 2023 Summary2424The expansion in financial investments accelerates,with The expansion in financial investments accelerates,with government bonds accounting for nearly 70%of financial government bonds accounting for nearly 70%of financial investmentsinvestmentsFinanc
205、ial investments account for the second largest component of commercial banks assets after loans.In 2022,the financial investments of 59 listed commercial banks(including the six state-owned commercial banks and joint-stock commercial banks)accounted for a total balance of RMB 76.7 trillion,represent
206、ing YOY growth of RMB 8.3 trillion or 12.1%(Figure 14).To support the economic recovery in 2022 and the development of the real economy,banks purchased treasury bonds and local bonds and engaged in other financial investments,causing the industrys financial investments to expand by 4.1 percentage po
207、ints YOY.At the end of 2022,the six state-owned commercial banks,which have played a pivotal role in expanding the sectors financial investments,had a balance of financial investments amounting to RMB 44.0 trillion,up 12.2%YOY;joint-stock commercial banks financial investments stood at RMB 19.2 tril
208、lion,up 11.4%YOY;and city commercial banks and rural commercial banks financial investments amounted to RMB 13.5 trillion,up 12.6%YOY.Figure Figure 1414 Financial investments of listed banks(RMB trillions,%)Financial investments of listed banks(RMB trillions,%)12%11%13%0%2%4%6%8%10%12%14%05101520253
209、035404550六大行股份制商业银行城商行和农商行金融投资增速（右轴）Six state-owned banksJoint-stock commercial banksCity&rural commercial banksFinancial investmentsYOY growth,right axisSource:Summarisedfindings from listed banks 2022 annual reports,and KPMG analysis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KP
210、MG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by gua
211、rantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview2525Commercial banks are facing stringent investing requirements due to regulations that aim to ensure the strength of their operations.In this context,bonds have become an attractive option for commercial banks financial investm
212、ents due to their stable returns,strong liquidity and massive circulation.Among the 59 listed banks,bond investments reached RMB 63.4 trillion in 2022,accounting for 83%of financial investments,up 2 percentage points YOY(Figure 15).Specifically,bond investments of the six state-owned commercial bank
213、s stood at RMB 40.4 trillion,accounting for 92%of the banks financial investments;bond investments of joint-stock commercial banks stood at RMB 13.7 trillion,accounting for 71%of the banks financial investments;and bond investments of city commercial banks and rural commercial banks stood at RMB 9.4
214、 trillion,accounting for 69%of the banks financial investments,up 5 percentage points YOY.Based on these figures,we can see that the six state-owned banks are relatively prudent in their financial investments,as more than 90%of their financial investments were bonds;but only about 60%of city and rur
215、al commercial banks financial investments were bonds as they focus more on equity-related products.Commercial banks mainly invest in government bonds,policy bank bonds,financial bonds and corporate bonds.Most commercial banks prefer government bonds,as evidenced by the fact that government bonds hel
216、d by the 59 listed banks amounted to RMB 43.7 trillion in 2022,or 69%of their total bond investments,up 5 percentage points YOY(Figure 16).Coming in second,financial bonds held by the 59 listed banks amounted to RMB 8.2 trillion in 2022,accounting for 13%of all bond investments.In third,policy bank
217、bonds held by the 59 listed banks stood at RMB 4.6 trillion,accounting for 7%of their bond investments.Lastly,corporate bonds held by the 59 listed banks amounted to RMB 3.1 trillion,or 5%of their bond investments,the least among all bond investments.The biggest investors in government bonds were th
218、e six state-owned commercial banks,while city commercial banks and rural commercial banks were the largest investors in financial bonds,policy bank bonds and corporate bonds.Figure Figure 1616 Bond investment structure of listed banks(RMB trillions,%)Bond investment structure of listed banks(RMB tri
219、llions,%)Source:Summarisedfindings from listed banks 2022 annual reports,and KPMG analysis0%20%40%60%80%100%政府债金融债政策性银行债企业债其他六大行股份制商业银行城商行和农商行Government bondsFinancial bondsBonds issued by policy banksCorporate bondsSix state-owned banksOthersJoint-stock commercial banksCity&rural commercial banks92
220、%71%69%0%20%40%60%80%100%051015202530354045六大行股份制商业银行城商行和农商行债券投资占金融投资比重（右轴）Six state-owned banksJoint-stock commercial banksCity&rural commercial banksBond investmentsProportion of financial investments,right axisSource:Summarisedfindings from listed banks 2022 annual reports,and KPMG analysisFigure
221、Figure 1515 Bond investment structure of listed banks(RMB trillions,%)Bond investment structure of listed banks(RMB trillions,%)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and K
222、PMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary2626Total
223、 liabilities expand as YOY growth steepensTotal liabilities expand as YOY growth steepensIn 2022,the PBOC adopted policy tools to support the development of the real economy,such as cutting interest rates and the RRR to maintain reasonably abundant liquidity.Meanwhile,in the face of capital market v
224、olatility,poor returns on funds and wealth management products,and a lower risk appetite among consumers,bank deposits have been quickly increasing.At the end of 2022,total liabilities of commercial banks amounted to RMB 294.3 trillion,up RMB 29.5 trillion or 11.2%YOY,which was 2.8 percentage points
225、 higher than the growth rate in 2021(Figure 17).LiabilityLiability perspectiveperspectiveFigure Figure 1717 Total liabilities and liability growth rates of listed banksTotal liabilities and liability growth rates of listed banksSource:Wind and KPMG analysis125.1144.3168.6182.1193.5220.1244.5264.7294
226、.312.9%15.3%16.9%8.0%6.3%13.7%11.1%8.3%11.2%0%2%4%6%8%10%12%14%16%18%050100150200250300350201420152016201720182019202020212022总负债，万亿元同比，右轴，%Total liabilities(RMB trillions)YOY growth rate,right axis(%)2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited
227、 liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed
228、in Chinese Mainland.OverviewOverview2727Both time deposits and personal deposits are rising as a share of Both time deposits and personal deposits are rising as a share of commercial banks total depositscommercial banks total depositsDeposit maturity structures differ vastly between the different ty
229、pes of commercial banks.For example,demand deposits and time deposits at the six state-owned banks accounted for 46%and 53%of their total deposits respectively at the end of 2022.In other words,there was a difference of 7 percentage points between the two,compared with a difference of 2 percentage p
230、oints in 2021,demonstrating a growing inclination toward time deposits.On the other hand,at the joint-stock commercial banks,city commercial banks and rural commercial banks,time deposits accounted for a markedly higher share than that of demand deposits,and the gap has widened over time.Specificall
231、y,at the end of 2022,the share of time deposits at joint-stock commercial banks was 13 percentage points higher than that of demand deposits;and in the case of city commercial banks and rural commercial banks,this difference reached 25 percentage points(Figure 18).Recent statistics show that listed
232、commercial banks have seen a structural increase in time deposits in general.From 2018 to 2022,the demand deposits of the six state-owned banks decreased by 4 percentage points,but time deposits increased by 6 percentage points.During that time,the share of demand deposits at joint-stock commercial
233、banks dipped from 46%to 44%,while the share of time deposits rose from 51%to 56%.City commercial banks and rural commercial banks have experienced a similar trend.The proportion of time deposits at these banks jumped 12 percentage points from 50%in 2018 to 62%in 2022,while the proportion accounted f
234、or by both demand deposits and other deposits4has been falling.At city commercial banks and rural commercial banks,many depositors have converted their funds from demand deposits to time deposits,so these banks are facing greater pressure in controlling the cost of interest-bearing deposits.Source:W
235、ind and KPMG analysis0%10%20%30%40%50%60%70%80%90%100%2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022国有六大行股份制商业银行城商行和农商行活期存款定期存款其它存款Six state-owned banksCity&rural commercial banksOther depositsTime depositsThe combined impact of the epidemic,the real estate downturn,weake
236、ning expectations among consumers,uncertain income prospects and capital market volatility has made individuals more inclined toward precautionary savings,which has given rise to a huge amount of excess deposits.In 2022,personal customer deposits accounted for 49%of the 59 listed commercial banks to
237、tal deposits,up 2 percentage points YOY.Meanwhile,personal customer deposits and corporate customer deposits at the six state-owned banks accounted for 56%and 43%of total deposits respectively,with the share of personal customer deposits climbing each yearfrom 50%in 2018 to 56%in 2022.Comparatively,
238、joint-stock commercial banks had a higher proportion of corporate customer deposits than the six state-owned banks and city commercial banks and rural commercial banks.However,banks customer portfolios were less diversified in 2022,and personal customer deposits as a share of all customers increased
239、 by 6%YOY.In 2022,personal customers accounted for 47%of city commercial banks and rural commercial banks total deposits,14 percentage points higher than at the end of 2018.In recent years,city commercial banks and rural commercial banks have vigorously developed personal customer business;and as a
240、result,the scale of personal customer deposits at these banks skyrocketed by 81%from 2018 to 2022(Figure 19).4According to banks annual reports,other deposits,including structured deposits,margin deposits,credit card deposits,outward remittances and remittances outstanding,account for an insignifica
241、nt proportion of commercial banks total depositsJoint-stock commercial banksDemand depositsFigure Figure 1818 Deposit maturity structure of listed banksDeposit maturity structure of listed banks 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liabi
242、lity company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chi
243、nese Mainland.Chinese Mainland Banking Survey 2023 Summary2828FigureFigure 1919 Proportion of personal and corporate deposits of listed Proportion of personal and corporate deposits of listed commercial bankscommercial banks0%20%40%60%80%100%2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 201
244、9 2020 2021 2022国有六大行股份制商业银行城商行和农商行个人客户公司客户其它存款Joint-stock commercial banksCity&rural commercial banksPersonal customersCorporate customersOther depositsSource:Wind and KPMG analysisThe overall cost of interestThe overall cost of interest-bearing deposits at the six statebearing deposits at the six
245、state-owned owned banks notches a small uptick,and policies to cut deposit interest banks notches a small uptick,and policies to cut deposit interest rates are announcedrates are announcedThe average cost of interest-bearing deposits at the six state-owned commercial banks stood at 1.77%at the end o
246、f 2022,up 0.08 percentage points YOY and demonstrating a generally upward trend.Except for PSBC,which notched a trivial decrease of 0.02 percentage points,the remaining five banks all saw increases in the cost of interest-bearing deposits,with Industrial and Commercial Bank of China(ICBC)and Bank of
247、 China(BOC)recording the largest increases(Figure 20).Higher costs on interest-bearing deposits mean heavier debt costs and squeezed profitability,which is not conducive to the steady operation of banks.Since 2022,regulators have been promoting the use of the bond market interest rate(the yield on C
248、hinas 10-year government bond)and loan market interest rate(the 1-year loan prime rate(LPR)as the basis for banks to price their deposit interest.At the same time,regulators have been lowering interest rates for time deposits,call deposits,agreement deposits and otherdemand deposit equivalents to al
249、leviate the burden of deposit liabilities on banks.To comply with policyrequirements and meet their own operational needs,in 2022,commercial banks saw two rounds of interestrate cutsone in April and another from September to October.Since the beginning of 2023,a number ofbanks have cut their deposit
250、 interest rates,and the cost of interest-bearing deposits is expected to dropfurther this year.Figure Figure 2020 Cost of interestCost of interest-bearing deposits of the six statebearing deposits of the six state-owned commercial owned commercial banksbanksSource:The six state-owned commercial bank
251、s annual reports from 2014-2022,and KPMG analysis1.0%1.5%2.0%2.5%201420152016201720182019202020212022工行农行中行建行交行邮储平均值ICBCABCBOCCCBBoComPSBCAverageSix state-owned banks 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Main
252、land,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOvervi
253、ew2929Operating income growth reaches a multiOperating income growth reaches a multi-year lowyear lowIn 2022,the 59 listed banks generated operating income of RMB 6,084.8 billion,representing YOY growth of 0.5%,a record low in recent years(Figure 21).Under the combined impact of the epidemic,soft ec
254、onomic growth and new asset management regulations,banks experienced a new normal in which their operating incomes grew at a medium to low pace instead of at double-digit rates.Operating income growth among the different types of banks has slowed by varying extents over the past few years.The six st
255、ate-owned banks growth fell the least,as their operating income growth dropped by 7.6 percentage points from 7.9%in 2019 to 0.3%in 2022.Next,joint-stock commercial banks operating income growth tumbled by 14 percentage points from 14.2%in 2019 to 0.2%in 2022.Finally,city commercial banks recorded th
256、e largest slump,as their operating income growth fell by 14.8 percentage points from 17.5%in 2019 to 2.7%in 2022.City commercial banks operating incomes are highly volatile due to their regional nature and scale limitations.ProfitProfit perspectiveperspectiveFigure Figure 2121 Operating incomes of l
257、isted banks(RMB 100 millions)Operating incomes of listed banks(RMB 100 millions)Source:Wind and KPMG analysis010,00020,00030,00040,00050,00060,00070,000六大行股份制银行城商行农商行Six state-owned banksJoint-stock commercial banksCity commercial banksRural commercial banks 2023 KPMG Huazhen LLP,a Peoples Republic
258、of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English
259、 company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary3030Banks operating incomes comprise three components:net interest income,net fee and commission income,and other non-interest income.In 2022,the 59 listed banks derived RMB 4,56
260、4.5 billion,or 75.0%of their operating income,from net interest income;RMB 838.2 billion,or 13.8%,from net fee and commission income;and RMB 654.1 billion,or 10.7%,from other non-interest income(Figure 22).Banks generate most of their operating income from net interest income,and net interest income
261、 as a share of total operating income has climbed from 71.8%in 2018 to 75.0%in 2022.Meanwhile,under the combined impact of regulatory rectifications of non-standard wealth management products and capital market volatility,net fee and commission income as a share of operating income shrank from 18.3%
262、in 2018 to 13.8%in 2022.In recent years,commercial banks in Europe and the US have been developing and increasing the share of their intermediary business.From 2018 to 2021,fee and commission income as a share of the operating income of systematically important banks under the direct supervision of
263、the European Central Bank(ECB)generally rose,and the average proportion of fee and commission income to operating income of the more than 100 systematically important banks in Europe amounted to 32%in 2018 and 29%in 2019,before climbing to 33%in 2021 after two consecutive years of growth.From 2018 t
264、o 2021,the intermediary business of commercial banks in the US expanded both in terms of scale and proportion.In the US,in 2021,annual non-interest income accounted for 36.3%of operating income,up 2.5 percentage points from the proportion in 20185.The high-quality development of intermediary busines
265、s is a litmus test for a commercial banks capabilities in financial services and product innovation,and also a lever for asset-light transformation.Based on the development journey of international commercial banks intermediary business and the asset-light transformation needs of commercial banks in
266、 China,domestic banks are seeing significant potential to develop their own intermediary business.Figure Figure 2222 Components of listed banks Components of listed banks opoperating income(%)erating income(%)Source:Wind and KPMG analysis0%20%40%60%80%100%利息净收入占比手续费及佣金净收入占比其他非息收入占比Proportion of net
267、interest incomeProportion of other non-interest income5China Banking Association,China Banking Intermediary Business Development Report and Selected Innovation Cases(中国银行业中间业务发展报告暨创新案例选编（2022）),12 January 2023,https:/www.china- of net fee and commission income 2023 KPMG Huazhen LLP,a Peoples Republi
268、c of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private Engli
269、sh company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview3131Figure Figure 2323 Net interest income of listed banks(RMB 100 millions)Net interest income of listed banks(RMB 100 millions)Source:Wind and KPMG analysis05,00010,00015,00020,00025,00030,00035,00040,0
270、0045,00050,000六大行股份制银行城商行农商行Six state-owned banksNet interest income sees positive YOY growth,maintaining Net interest income sees positive YOY growth,maintaining its 70%share of overall operating incomeits 70%share of overall operating incomeNet interest income is the major source from which banks
271、derive their operating income.In recent years,net interest income as a proportion of listed banks operating income has increased steadily from 71.8%in 2018 to 75.0%in 2022.Facing narrowing net interest margins in 2022,banks responded by increasing the volume of granted loans to make up for the narro
272、wing margins.In 2022,the net interest income of the 59 listed banks rose to RMB 4,564.5 billion,marking a 2.7%increase YOY.All listed banks apart from the joint-stock commercial banks saw modest growth in their net interest income.The six state-owned banks achieved YOY growth of 3.7%or RMB 100.6 bil
273、lion in net interest income;city commercial banks saw YOY growth of 2.7%or RMB 12.4 billion in net interest income;and rural commercial banks notched YOY growth of 1.7%or RMB 2 billion in net interest income(Figure 23).Going forward,commercial banks will face capital restrictions and profitability p
274、ressure after adopting the traditional model of credit expansion in the previous year,as the financial sector refocuses on its original core business,financial regulation tightens and net interest margins narrow.In this context,commercial banks need to accelerate their business transformation and de
275、velop high-quality intermediary business to enhance their financial service and product innovation capabilities,and their support for the real economy.Wealth management business faces pressure as Wealth management business faces pressure as intermediary business contractsintermediary business contra
276、ctsBanks intermediary business has been facing unprecedented challenges amid the COVID-19 epidemic,macroeconomic complexities and tightening financial regulation;and as a result,listed banks fee and commission income has generally contracted.As new asset management regulations were introduced,combin
277、ed with capital market volatility and the pressure to cut fees and charges,net fee and commission income trended downward in 2021 and 2022,and the scale of intermediary business contracted in 2022.Joint-stock commercial banksCity commercial banksRural commercial banks 2023 KPMG Huazhen LLP,a Peoples
278、 Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a priva
279、te English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary3232In 2022,the 59 listed banks generated RMB 838.2 billion in net fee and commission income,representing a YOY decline of 2.9%.The six state-owned banks recorded net f
280、ee and commission income of RMB 472 billion,down 2.9%YOY;net fee and commission income of rural commercial banks plunged by 13%YOY to RMB 7.4 billion,the deepest fall among all banks;while that of joint-stock commercial banks dipped by 1.8%YOY to RMB 300.1 billion(Figure 24).Figure Figure 2424 Net f
281、ee and commission income of listed banks(RMB 100 millions)Net fee and commission income of listed banks(RMB 100 millions)Source:Wind and KPMG analysis02,0004,0006,0008,00010,00020182019202020212022六大行股份制银行城商行农商行Six state-owned banksJoint-stock commercial banksCity commercial banksRural commercial ba
282、nksCommercial banks comprehensive wealth management business,including agency,wealth management,asset management and custodian business,is vulnerable to capital market volatility.As a result,income derived from comprehensive wealth management business by leading commercial banks,including the six st
283、ate-owned banks,has been declining.In 2022,the six state-owned banks generated RMB 209.8 billion from agency and custodian business,representing a YOY decline of 4%(Figure 25).The agency and custodian business of all banks,except for PSBC and ABC,deteriorated to different extents6.Figure Figure 2525
284、 Scale and growth rate of the six stateScale and growth rate of the six state-owned banks wealth owned banks wealth management,agency and custodian businessmanagement,agency and custodian businessSource:The six state-owned commercial banks 2022 annual reports,and KPMG analysis2.5%8.0%20.1%13.6%18.2%
285、60.5%14.1%-30%-20%-10%0%10%20%30%40%50%60%70%0100200300400500600工行农行中行建行交行邮储平均值2021年业务规模，亿元2022年业务规模，亿元2021年同比，右轴2022年同比ABCBOCCCBBoComPSBCAverage6 Certain banks do not disclose separate figures for wealth management business and instead include it within agency business2022年同比，右轴ICBC2021 scale(RMB 1
286、00 millions)2022 scale(RMB 100 millions)2021 YOY growth rate,right axis2022 YOY growth rate,right axis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partn
287、ership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview33332022 saw a resurgence of the epidemic,setbacks in resident
288、s income growth,and weakened consumer spending,which had a dampening effect on income from card settlement business,which is directly related to consumer spending.In the previous year,enterprises were pessimistic about the future and more conservative in their investments;and their demand for card,s
289、ettlement and clearing services declined accordingly.Meanwhile,policies encouraging commercial banks to support the real economy have been introduced to steadily reduce enterprises financing costs and individuals consumer credit costs.The PBOC,CBIRC and other regulators issued policies to urge comme
290、rcial banks to cut fees and charges,and commercial banks are encouraged to offer further discounts or fee waivers to small and micro enterprises and other groups targeted for assistance.In 2022,the economic downturn in combination with fee-cutting policies dragged on commercial banks settlement fee
291、income.In 2022,the six state-owned banks income from card,settlement and clearing business fell 0.4%YOY to RMB 213.1 billion.Specifically,ICBC and BOC saw income growth in their card,settlement and clearing business,but the other banks incomes declined to different extents.During the year,ICBC recor
292、ded RMB 63.2 billion in income from card,settlement and clearing business,representing YOY growth of 9.0%,which was the highest among the six state-owned banks(Figure 26).Figure Figure 2626Income and growth rate of the six stateIncome and growth rate of the six state-owned banks card,owned banks car
293、d,settlement and clearing businesssettlement and clearing businessSource:The six state-owned commercial banks 2022 annual reports,and KPMG analysis-10%-5%0%5%10%15%0100200300400500600700工行农行中行建行交行邮储银行平均值2021年收入，亿元2022年收入，亿元2021年同比，右轴2022年同比，右轴ICBCABCBOCCCBBoComPSBCAverage2022 income(RMB 100 millions
294、)2021 income(RMB 100 millions)2021 YOY growth rate,right axis2022 YOY growth rate,right axisOther nonOther non-interest income interest income stabilisesstabilises as a share of operating as a share of operating income,although income falls in 2022income,although income falls in 2022In 2022,other no
295、n-interest income as a proportion of overall operating income remained relatively stable at around 10%.Other non-interest income streams mainly include investment income,net income from changes in fair value,net income from exchange and exchange rate products,and other non-operating income.These inc
296、omes tend to be more sensitive to capital market volatility,fluctuations in RMB exchange rates and other factors.In 2022,other non-interest income of the 59 listed commercial banks decreased by 9.0%YOY to RMB 654.1 billion(Figure 27).Investment income accounted for 58.7%of this total at RMB 384.2 bi
297、llion;net income from changes in fair value stood at RMB-42 billion,the first loss in five years;net income from exchange and exchange rate products accounted for 6.0%at RMB 39 billion;and other non-operating income accounted for 41.7%at RMB 272.8 billion.2023 KPMG Huazhen LLP,a Peoples Republic of
298、China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English co
299、mpany limited by guarantee.All rights reserved.Printed in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary3434Figure Figure 2727 Other nonOther non-interest income of listed banks(RMB 100 millions)interest income of listed banks(RMB 100 millions)-1,00001,0002,0003,0004,0005,0006,0007,00
300、08,00020182019202020212022投资收益公允价值变动净收益汇兑及汇率产品净收益其他业务收入Investment incomeNet income from changes in fair valueNet gains from foreign exchange(FX)and FX products Income from other businessesSource:Wind and KPMG analysisJointJoint-stock commercial banks and city commercial banks stock commercial banks
301、and city commercial banks see the highest YOY growth in investment incomesee the highest YOY growth in investment incomeIn 2022,investment income of the 59 listed commercial banks stood at RMB 384.2 billion,representing YOY growth of 4.9%or RMB 18 billion(Figure 28).Listed banks differed vastly in t
302、heir investment income performance.Investment income among the six state-owned banks declined,but joint-stock commercial banks,city commercial banks and rural commercial banks registered varying degrees of investment income growth.Among the different types of banks,joint-stock commercial banks notch
303、ed the highest YOY growth in investment income at 13%.City commercial banks also outperformed their peers as their investment income climbed 10%YOY,nearly doubling their income in 2018.Figure Figure 2828Investment income of listed banks(RMB 100 millions)Investment income of listed banks(RMB 100 mill
304、ions)Source:Wind and KPMG analysis05001,0001,5002,0002,5003,0003,5004,0004,50020182019202020212022六大行股份制银行城商行农商行Six state-owned banksJoint-stock commercial banksCitycommercial banksRuralcommercial banks 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limit
305、ed liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printe
306、d in Chinese Mainland.OverviewOverview3535Capital market volatility drives negative changes in fair Capital market volatility drives negative changes in fair valuevalueIn 2022,net income from changes in fair value stood at RMB-42 billion,the first loss since 2018,as listed banks incurred floating lo
307、sses in financial investments(Figure 29).The volatility of the stock and debt markets in 2022 impacted the valuation of equity instruments and triggered unrealised losses for bond investments,which led to net losses from changes in fair value.Specifically,changes in fair value at the six state-owned
308、 banks plunged by 163%or RMB 72.1 billion YOY to RMB-27.9 billion;joint-stock commercial banks notched the most significant YOY decline of 204%,as their changes in fair value fell to RMB-14.8 billion;and city commercial banks recorded RMB 1.1 billion in changes in fair value,representing a somewhat
309、milder YOY decrease of 85%.The changes in fair value generally had a negative impact on listed banks,but some of them were quick to seize opportunities presented by capital market trends and fluctuations,and a few even generated floating profits in financial investments.Going forward,banks should st
310、rive to exercise better judgement of macroeconomic developments and capital markets in China and abroad,raise their awareness in investment risk management,and strengthen their financial investment capabilities.Figure Figure 2929 Changes in fair value of listed banks(RMB 100 millions)Changes in fair
311、 value of listed banks(RMB 100 millions)Source:Wind and KPMG analysis-600-400-200020040060080020182019202020212022六大行股份制银行城商行农商行Ruralcommercial banksCitycommercial banksJoint-stock commercial banksSix state-owned banksNet gains from FX and FX products record remarkable YOY Net gains from FX and FX p
312、roducts record remarkable YOY growth,with jointgrowth,with joint-stock commercial banks doubling their stock commercial banks doubling their figuresfiguresIn 2022,net gains from FX and FX products of the 59 listed commercial banks increased YOY by 19%to RMB 39 billion(Figure 30).Net gains from FX an
313、d FX products at the six state-owned banks were robust,although lower than in 2021.Joint-stock commercial banks,city commercial banks and rural commercial banks all achieved growth in net gains from FX and FX products.Specifically,in 2022,city commercial banks turned net losses in the previous year
314、into net gains from FX and FX products,posting whopping YOY growth of 205%.Meanwhile,joint-stock commercial banks doubled their net gains,and rural commercial banks notched impressive YOY growth of 94%.2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limite
315、d liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed
316、 in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary3636FigureFigure 3030 Net gains from FX and FX products of listed banks(RMB 100 millions)Net gains from FX and FX products of listed banks(RMB 100 millions)Source:Wind and KPMG analysis-300-200-100010020030040050020182019202020212022六大
317、行股份制银行城商行农商行Six state-owned banksJoint-stock commercial banksCitycommercial banksRuralcommercial banks05001,0001,5002,0002,5003,00020182019202020212022六大行股份制银行城商行农商行Six state-owned banksJoint-stock commercial banksCitycommercial banksRuralcommercial banksIncome from other business rises,with jointIn
318、come from other business rises,with joint-stock stock commercial banks recording doublecommercial banks recording double-digit growthdigit growthIn 2022,income from other business of listed commercial banks increased 8%YOY to RMB 272.9 billion(Figure 31).All banks except for rural commercial banks a
319、chieved YOY growth in income from other business.Specifically,income from other business at the six state-owned banks increased 6%YOY to RMB 249.4 billion;that of joint-stock commercial banks climbed 27%YOY to RMB 21.6 billion;and that of city commercial banks rocketed 68%YOY to RMB 1.6 billion.Conv
320、ersely,income from other business of rural commercial banks tumbled by 57%or RMB 380 million YOY after rising to RMB 660 million in 2021 from RMB 370 million in the prior year.FigureFigure 3131Distribution of listed banks income from other business Distribution of listed banks income from other busi
321、ness(RMB 100 millions)(RMB 100 millions)Source:Wind and KPMG analysis 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KP
322、MG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview3737Operating expenses fall due to a contraction in impairment Operating expenses fall due to a
323、 contraction in impairment losses,with the six statelosses,with the six state-owned banks seeing the smallest owned banks seeing the smallest decline among all banksdecline among all banksIn recent years,the operating expenses of the 59 listed banks generally trended upward,rising from RMB 2,501.7 b
324、illion in 2018 to RMB 3,234.4 billion in 2021,with city commercial banks operating expenses growing the fastest during that period at a rate of 32.6%,although their annual operating expenses are still the lowest among the four.In 2022,driven by a contraction in impairment losses,general operating ex
325、penses of all banks started to fall.Operating expenses of listed banks declined by 2.5%YOY to RMB 3,154.1 billion.Specifically,joint-stock commercial banks notched the deepest YOY fall in operating expenses at 4.2%,and city commercial banks came in second with a drop of 3.6%YOY.While operating expen
326、ses at the six state-owned banks account for more than half of the total operating expenses of Chinese listed banks,their expenses recorded only a mild slide of 1.1%YOY in 2022(Figure 32).FigureFigure 3232 Operating expenses of listed banks(RMB 100 millions)Operating expenses of listed banks(RMB 100
327、 millions)Source:Wind and KPMG analysis05,00010,00015,00020,00025,00030,00035,00020182019202020212022六大行股份制银行城商行农商行Six state-owned banks、Joint-stock commercial banksCitycommercial banksRuralcommercial banks 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limited,a l
328、imited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Pr
329、inted in Chinese Mainland.Chinese Mainland Banking Survey 2023 Summary3838Banks operating expenses mainly comprise general and administrative expenses,impairment losses,tax and surcharges,and other operating costs.General and administrative expenses and impairment losses are the two major components
330、 of operating expenses,together accounting for nearly 90%of operating expenses.They are also the most volatile components.Tax and surcharges and other operating costs,both of which are relatively stable,account for approximately 2%and 12%of operating expenses respectively.In 2022,general and adminis
331、trative expenses accounted for 49%of listed banks operating expenses,up 3%YOY;impairment losses accounted for 37%,down 4%YOY;and the proportions of tax and surcharges and other operating costs remained unchanged(Figure 33).Figure Figure 3333Components of listed banks oComponents of listed banks oper
332、atingperating expenses(%)expenses(%)Source:Wind and KPMG analysis0%20%40%60%80%100%20182019202020212022管理费用减值损失其他业务成本税金及附加General and administrative expensesImpairment lossesOther operating costsTax and surcharges 2023 KPMG Huazhen LLP,a Peoples Republic of China partnership,KPMG Advisory(China)Limi
333、ted,a limited liability company in Chinese Mainland,KPMG,a Macau(SAR)partnership,and KPMG,a Hong Kong(SAR)partnership,are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Printed in Chinese Mainland.OverviewOverview3939General and administrative expenses are still i
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